Beijing, Jul.10 (Reuters) - China's imports of most major commodities fell in June from May's unusually high levels, providing a more accurate picture of the weakening economy and strengthening the argument for more stimulus measures, analysts said.
China is the world's biggest buyer of industrial metals and most grains. It is also the world's second largest crude oil consumer and released trade data on Tuesday.
Overall imports grew 6.3 percent in June on the year, half the rate forecast by economists, in the latest in a slew of weak economic data that has signaled the likelihood of more policy moves to support the slowing economy.
"We just need patience to see demand for commodities pick up gradually in September and October, and that will of course be at a quicker pace if the government adopts more measures to boost economic growth," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.
"The major concern is any big investment in infrastructure construction may trigger overcapacity."
May's unexpectedly strong import figures were also distorted by crude oil stockpiling, vigorous refinery runs and the move of some United States stocks to bonded warehouses in China.
Lower fuel demand and a decline in stockpiling cut June's crude oil imports by almost 15 percent on the month to 21.72 million metric tons (23.9 million tons). The daily rate of 5.29 million barrels was the lowest this year, but still 10.3 percent higher than the same period last year.
Actual demand from refineries in May also failed to match the record high imports, swelling inventories and forcing refiners to cut back on shipments in June. A lack of new storage capacity also limited stockpiling.
"Commercially, refiners have no motivation to import more crude as they are cutting crude runs," said a Beijing-based oil analyst. "Strategically, we have not seen any new state storage put into operation recently. So I don't think crude imports will rebound quickly."
But Natalie Robertson, a commodities analyst with ANZ, said the market need not be unduly troubled yet. "On a historical basis, anything above 20 million metric tons looks supportive for Brent crude prices," she said.
COPPER RETURNING TO NORMAL
Copper imports fell 17.5 percent from May to 346,233 metric tons, but were broadly in line with expectations as demand has been largely weak this year due to a decline in the appetite for manufactured goods as the global economy softens.
Europe and the United States are China's main customers and both have been beset by economic troubles.
"The June imports basically returned to the level in April, which isn't bad, considering that everyone had expected imports to ease in the second quarter due to unfavorable price differentials," Bonnie Liu, an analyst at Macquarie, said.
There was also a decline in demand for imports used as collateral for loans.
"The fall in June may be related to lower demand for imports that were used as a financing tool," said Zhang Ao, an analyst with Minmetals Futures. "The economic slowdown has cut credit demand by companies and therefore the need for such financing imports fell."
IRON ORE FALLS, SOY RISES
Iron ore imports fell more quickly than expected, dropping 8.7 percent to 58.31 million metric tons, their second lowest monthly level this year. Demand remains tepid and traders are expecting a further fall in bookings over July, with steel prices not expected to recover.
The decline also reflects the seasonal downturn in steel production in China as construction activity slows across the country during scorching summer months.
But analysts pointed out that the figure remains much higher than last year, with imports over the first six months up around 9.7 percent despite a much slower increase in steel output over the period.
"Lower seaborne prices have displaced high cost domestic ore - and Australian miners have been the main beneficiaries of this," said Sebastian Lewis, head of analytics with Steel Business Briefing in Shanghai.
China imported 5.62 million metric tons of soybeans in June, the highest since November last year and up from 5.28 million metric tons in May. However, it was far lower than the record 6.4 million metric tons forecast by a government think-tank.
Traders said shipments were being deferred because crushing margins were not particularly strong right now, and also because of anticipated shortages later in the year.
"The deliveries due for September and October are not enough to meet demand, so many are postponing cargoes until later in the year," a Beijing-based trader said.